1. Field of the Invention
The present invention relates to a method and system for managing financial transactions that require goods or services from multiple vendors and, in particular, to methods and systems for facilitating real estate closing transactions.
2. Background of the Technology
There exist in the art paper-based methods and systems for completing real estate closing transactions, but these systems are usually inefficient, and are bound by the limitations of traditional paper-based systems. Some computer-implemented systems for managing real estate closing transactions are known, but these systems typically do not possess the functionality required to seamlessly manage all the steps that comprise the closing of a financial transaction. Many financial institutions and other vendors rely on existing accounts payable systems to manage closing transactions, which is inefficient. Moreover, existing computer-implemented systems for managing real estate closing transactions typically suffer from the disadvantage of difficult and cumbersome integration of the various payment methods utilized by different parties to the transaction. For example, in current systems, it is difficult to integrate payments by paper check, direct deposit, and electronic transfers, among others.
Furthermore, a real estate closing transaction must normally be accomplished within a limited time-frame. Speed and efficiency are key features of any computer-implemented system for management of real estate closing transactions. Currently, real estate closing transactions involve completion of standard settlement forms, such as the HUD-1 published by the United States Department of Housing and Urban Development, or other similar forms. (The HUD-1 is a standard form that is available from a variety of public sources). Parties to any federally supported mortgage must present an executed HUD-1 document to complete the closing transaction.
A typical accounts payable system, however, cannot easily transfer transaction information into a HUD-1 form, and the information must instead be completed manually, adding time and costs to the transaction. For example, the financial institution must either generate the HUD-1, or outsource the HUD-1 generation to a document preparation company, which would normally convert the handwritten HUD-1 document into electronic form, such as in PDF (Portable Document Format) or TIFF (Tagged Image File Format) format. The converted document is transmitted to the broker, who makes additional changes/updates (e.g., electronically or manually), and returns the document to the financial institution. The financial institution (e.g., through the document preparation company) re-generates the HUD-1, and transmits it to the title company, which also makes changes/updates to the HUD-1. This process is repeated until all parties have reviewed, modified, and approved the final document. If one party to the transaction does not approve the changes made by another party, the party that proposed the changes must be notified, and a new copy of the document circulated. Finally, once all of the changes are entered, accepted, and finalized, the financial institution (e.g., through the document preparation company) prepares the final HUD-1 for use during the closing transaction, thus bringing to completion this labor-intensive, cumbersome, and costly process.
Systems and methods for completing closing transactions over the telephone are also known, but they require additional advance scheduling to ensure that all parties are available for telephone conferences at the same time, and thus provide, at best, only a marginal increase in overall efficiency.
For the purposes of this application, “financial institutions” include banks, investment companies, real estate lenders, investment and holding companies, and any commercial entity engaged in the business of financing loans or mortgages. “Brokers” include brokerages, real estate agents, corporate land purchasers, and any commercial entity, individual or otherwise, engaged in the business of buying and selling real property. “Potential borrower” or “borrower” and “potential customer” or “customer” are used interchangeably herein to describe any person seeking to acquire a mortgage or loan (e.g., by employing the services of a broker or financial institution). “Closing” and “closing transaction” refer to the set of transactions commonly associated with “closing” on a real estate transaction, that is, completing all the paperwork and necessary steps to finalize the transaction of exchanging property for value.
Sub-transactions define the parameters of the transaction or otherwise bring the underlying transaction to completion. Sub-transactions include transactions between the end users of the system (e.g., brokers, financial institutions and potential borrowers) and vendors, such as inspection companies or closing companies that have service agreements with end users or other involved parties.
There is an unmet need in the art for methods and systems for the efficient management of loan closing transactions.
There is a further need in the art for methods and systems that provide the capability of integrating individual party requirements with respect to payment methods and timing.
There is a further need in the art for methods and systems that provide interactive updatable computerized standardized settlement forms, such as the HUD-1, or other similar forms.
There is a further unmet need in the art for methods and systems that seamlessly integrate all processes involved in a real estate closing transaction, including creation and circulation of all documents and forms involved among all parties to the transaction.